Is Pepperstone A Good Forex Broker?

By John Mitchelleidy

For the last six months I have been in search for a good fx broker for to use my scalping Expert advisor with. Obviously not all forex brokers are identical, because of this I had to open a forex trading accounts with many of different fx brokers. Opening accounts and conducting in-depth testing is quite an arduous job so to save you the time and trouble of doing this for yourself I made a decision to write this report detailing my findings.

In order to conduct this test of course I had to compile a shortlist of forex brokers to open trading accounts with. This was quite an easy task for me as it was simply a matter of selecting forex brokers with the lowest spreads from Myfxbook. My broker shortlist was made up of Fx Open, Pepperstone, Armada Markets and IC Markets. These forex brokers were chosen simply because they have some of the lowest EUR/USD spreads in the world. IC Markets had the lowest spreads of the lot with an average spread of 0.1 pips for EUR/USD, on the other hand Pepperstone had the largest spread which averaged 0.3 pips. Spreads however aren't really the only key aspect that needs to be tested when deciding on a suitable forex broker for EA trading, other significant aspects include deal execution speed and slippage.

I started my testing by opening real trading accounts with an opening balance of $1000 with all 4 foreign exchange providers. All fx brokers had a relatively smooth account opening process with IC Markets being the easiest broker of the lot to open a trading account with. With $1000 in each and every one of my 4 fx broker trading accounts I was ready to give all 4 forex brokers a workout.

It was very apparent that IC Markets spreads were the very best from the 4 brokers trialed so it was now time to test slippage across all the fx brokers. Slippage isn't the easiest parameter to test as it is very dependent on market liquidity that's strongly linked to market conditions. One Significant thing to note here is that usually ECN forex brokers have a little more slippage than your usual market maker brokers. To test slippage across all four fx brokers I made a decision to utilize a robot that I would have running on a VPS setup with all 4 of my live forex provider accounts. The ea that I used for this experiment was Super Scalper or SS, this robot adopts an aggressive fx trading strategy which enters positions on price breakouts which makes it the ideal ea to utilize when testing slippage across fx broker accounts.

After 9 weeks of testing across all broker trading accounts in a variety of different market conditions I had enough information to have the ability to produce conclusive findings which were interesting to say the least. Across all fx broker accounts the results were extremely different, the worst slippage occurred with forex broker Armada Markets where the slippage averaged 6 pips, not a good outcome, the 2nd worst was Pepperstone where slippage was only a little better averaging 5.5 pips. FX Open and IC Markets were really the only two fx brokers to score well on this test, FX Open had slippage of about 3 pips whereas the most slippage that I got at IC Markets was 0.5. This straightforward test proves that the spreads offered by a few forex brokers like FX Open are not always that great when you consider slippage. In the case of IC Markets the low spreads are accompanied by negligible slippage, ICMarkets really do come out on top in the slippage test.

Testing execution speed was next on the agenda. It was extraordinary to see that only two of the four forex brokers trialed had trade servers in the Equinix NY4 data centre in New York. Of course having trade servers in Equinix NY4 mean execution will of course be must faster, the main reason for this is because most bank trade servers are also in NY4. Faster execution speeds means less slippage and improved performance for robotic EA traders. My execution speed trials revealed interesting results, it was amazing to note that one of the fx brokers Pepperstone have weak performance overall in spite of having their servers in NY4. Trade speed varied quite a bit, Armada markets had the worst results with average latency being 710 m/s, Pepperstone followed with 540 m/s, FX Open had a median of 430 m/s latency and IC Markets topped the lot with a staggering 145 m/s latency. IC Markets has by far the best performance when it comes to deal execution speeds.

So to conclude my brief evaluation, all 4 forex brokers are fine, but for those who won't accept a broker that's fine and want an edge in your forex trading regarding spreads, slippage and trade speed one fx broker comes out on top. This broker is rated as world class in my books and not just fine, that forex broker is IC Markets. It goes without saying you need to do some of your own testing also but for me IC Markets is the only word class broker out of the four brokers that I selected to assess.

About the Author:

All 4 fx brokers are fine, but if you will not accept a broker which is fine and need an edge in your fx trading regarding spreads. This broker is rated as world class in my books fx broker is IC Markets spreads. It goes without saying you need to do some of your own testing also but for me IC Markets is the only real word class fx broker out of the 4 fx brokers that I selected to assess.